Federico Pontoni

Ownership Separation of the Gas Transportation Network: Theory and Practice

This article analyzes the pros and cons of ownership separation of the gas transportation network. This analysis is made with a specific test that confronts two pairs of different theoretical approaches on vertical integration. The result of this test shows that no uncontroversial solution can be offered to this problem, since all arguments (be them in favour or against) can be comfortably contrasted by a counterargument. In our view, an effective regulation would solve the problem, even though it has to be highlighted that ownership separation of the gas transportation network is not the key aspect of the gas industry. EU directives, in fact, cannot be applied where the biggest part of the value chain is produced, that is to say beyond the European borders, where an oligopoly operates. Due to its bargaining power, this oligopoly captures almost all the scarcity rent, reducing the scope for market liberalization.

Electricity Distribution Investments: No Country for Old Rules? A Critical Overview of UK and Italian Regulations

The increase in distributed generation and the increasingly pro-active role of mass consumers demand “smart” distribution networks. To this aim, regulation too must innovate, in order to promote innovative and additional infrastructural investments.This paper develops, first, a methodological framework addressing the relevant drivers for the regulation of distribution network investments. In the light of this framework, we then perform a critical overview of the British and Italian regulatory approach to distribution network investments. Finally, we discuss some policy insights for the Italian regulator.

The Health and Economic Burden of Air Pollution

Many epidemiologic data support the association between ambient air pollution and all-cause mortality and morbidity, mainly from respiratory and cardiovascular diseases, particularly in the elderly, infants, pregnant women, and people with comorbidities. In addition, air pollution has been related to higher risks for lung cancer and allergic diseases. The World Health Organization (WHO) estimated that in the year 2012 ambient air pollution was responsible for 3.7 million annual deaths, representing 6.7% of all-cause deaths and tripling the 2008 estimates. Worldwide, air pollution causes 16% of deaths due to lung cancer, 11% of deaths due to chronic obstructive pulmonary disease, more than 20% of deaths due to ischemic heart disease and stroke, and 13% of deaths due to respiratory infections. In 2012, the Global Burden of Disease report identified air pollution among the leading risk factors for disease burden, being globally responsible alone for 3.1% of disability-adjusted life years. Considering the strong health impact of air pollution, it is not surprising to expect substantial monetary consequences. The economics of air pollution are largely directed to measure the costs for individuals and the society at large. Health economics aims at quantifying the cost of any illness, distinguishing those associated with mortality from those associated with morbidity. There are 2 common metrics to estimate the monetary value of a life: The most common is the value of a statistical life, defined as the value that an individual places on a marginal change in his/her likelihood of dying, so that the aggregation of the individual values of the estimated marginal changes returns the overall cost of reducing by 1 the average number of deaths (ie, value of a statistical life). The second is the value of a life year, and it attaches a monetary value to the disability-adjusted life years, being a measure of how much people would pay to live another (healthy) year. The value of a statistical life and the value of a life year are correlated, and often the latter is derived from the former. Studies focusing on mortality rates use value of a statistical life estimates, whereas those counting the variation of different measures of life-years opt

Hydropower production and environmental regulation: opting for a performance-based tax approach

This paper discusses the case for reforming the actual mechanism for charging water abstractions for hydropower production in Italy and proposes to introduce a performance-based environmental fee. This should be able, on the one hand, to internalize the environmental costs that hydropower production causes and, on the other, to stimulate producers to opt for more environment-friendly management of hydropower plants. We think, in fact, that the re-issue of several expired hydropower concessions represents an opportunity to redefine the taxation system to which hydropower is currently subject to, in order to introduce finally a form of environmental taxation coherent with the Water Framework Directive. In particular, the proposed fee is a real environmental tax, as it aims at changing the environmentally impacting behavior by increasing the marginal cost of damaging river ecosystems. Therefore, it is equitable, as it does not tax all producers the same way, but according to the impacts that their production generates. Finally, it is immediately applicable, as it is based on the successful experience of performance-based regulation in several other sectors.

Choice experiments and environmental taxation: An application to the Italian hydropower sector

This paper represents the first attempt to simulate the introduction of an incentive-based environmental tax to the hydropower sector. As hydropower can negatively affect fluvial ecosystems, the paper shows how to design and determine per unit tax values for a taxation system that would then be able to provide producers with incentives to opt for more environmentally friendly solutions. The simulation is carried out in the Province of Sondrio (home to 20% of the Italian hydropower production). First, the paper determines the monetary value of the fluvial ecosystem by means of a Discrete Choice Experiment (DCE); then, it compares the models estimated in WTP and preference spaces in order to opt for the most effective punctual values to be used as inputs in a newly designed incentive-based environmental tax; finally, it simulates the effects of the introduction of such a tax to a real case. According to our results, the magnitude of the environmental tax is such that it would certainly stimulate environmentally friendly production, without hindering operators’ profitability.

A comprehensive ex-post assessment of the Italian RES policy: deployment, jobs, value added and import leakages

A massive deployment of renewable electricity generation took place in Italy in less than eight years. A generous feed-in tariff, coupled with favourable institutional conditions, allowed the installation of more than 28 GW of PV, wind and other RES technologies. By 2014, Italy has already attained its 2020 goals on RES production. Besides, environmental objectives and compliance with EU targets, the policy was aimed at promoting green jobs and industrial production of RES technologies. Exante economic analyses advocated considerable economic and industrial spill-overs from the introduction of RES support policies. Despite official rhetoric and ex-ante studies about jobs and economic growth associated to RES adoption, at scholarly level there is no consensus on the actual effects and implications of these policies on National economies. This paper provides a first comprehensive ex-post analysis of the Italian case, filling an important gap. Our analysis is carried out with the development of a specific input-output model, with refined technological vectors and with the internalization of trade coefficients. We show that the effects have been unequivocally lower than expected; that most of the jobs created belonged to the service sector and not to the industrial sector and that the value added was much lower than expected due to significant export leakages.

What Determines Efficiency? An Analysis of the Italian Water Sector

The Italian water sector has encompassed major changes since mid?90s when law 96/94 has entered into force. Next to private participation, integration of services and growth in production scales, the reform was intended to revolutionize the traditional financial model almost fully based on public funds. Although citizens, politicians and experts on water services have been debating for a long time on the impact of the reform on the industry, as well as on the fairness of a tariff system inspired by the concept of full cost recovery, we are still on a state of uncertainty. The final purpose of this paper is to provide regulators with guidelines that could be used to revise water tariffs in a way that may be cost?efficient, sustainable and fair to the most. According to the analyses, which rely on firm?specific Xinefficiency scores, despite a satisfactory mean level of performance, in the period under investigation, efficiency improvements have been limited. Moreover, the results demonstrate that both the ownership structure and politics do have an impact on the efficiency of the firms: in particular, public shareholding and centreright local governments negatively affects firms’ performances. To this respect, we think that a more effective regulation would also have the side effect of loosening the ties between politicians and managers.

Italian Regulation of Electricity Distribution and its Impact on Efficiency, Investments and Innovation: A Qualitative Assessment

The increase in distributed generation and the pro-active role of consumers call for smarter networks. Consequently, regulation must change to promote this evolution. This article performs a critical overview of the Italian regulation of electricity distribution and its effectiveness in encouraging efficiency, quality and innovative investments. The analysis shows that the regulator has followed a building-block approach: throughout different regulatory periods, it has added new modules to its previous regulatory mechanism to take care of the constantly increasing set of objectives. This does not give DSOs a unitary and coherent regulatory framework and has led to the overlapping of different incentive mechanisms.

Incentivi alle nuove infrastrutture d'approvvigionamento di gas: il caso del GNL

A primary concern of the European Union in recent years has been to promote the stability and assurance of the supply of energy to Member States. The European Council has identified the LNG chain as a way to achieve this goal, leading many EU-member States to adopt incentive regulations to encourage companies to build new regasification plants. Our paper discusses and compares these regulations and then focuses on the Italian case. Italy is very reliant on natural gas, but still has no importation infrastructures operated by newcomers. This has prompted the Italian authority to implement a special incentive regulation aimed at facilitating the entry of newcomers to the market. This regulation (No. 178/05) has attracted a higher filing of new infrastructure plans than all those filed in the rest of the EU combined. Our paper claims that this regulation is over-weighted on the incentive side, with the risk that it will both reduce the possibility of newcomers to enter the market and create considerable costs to the entire Italian gas system.